New Shareholder Voting Rules for the 2010 Proxy Season

The staff of the SEC is issuing this Alert to make investors aware of certain key changes to the voting process for election of directors at annual shareholder meetings beginning in 2010. These changes increase the importance of investor participation in governance of the companies they own.

Your right to vote

One of investors’ key rights is the right to vote their shares on important matters that affect the companies they own. Among the most important of these matters is the election of persons nominated to serve on the company’s board of directors. Directors have the responsibility for overseeing the management and direction of the company. As a result, it is important that you vote for the directors whom you believe are best suited to safeguard your investment.

Voting your shares

Although investors are entitled to attend the meeting of shareholders that is held to elect directors and vote their shares, many investors do not. As a result, companies will generally provide investors a means — commonly either a proxy card or a voting instruction form — to participate in the election of directors by allowing investors to direct designated persons to vote their shares in a particular way at the meeting. If shares are held by a broker, however, the broker can direct how the investor’s shares will be voted under certain circumstances without getting instructions from the investor.

Key changes for the 2010 proxy season

As of January 1, 2010, brokers no longer have the discretion to vote their customers’ shares held in companies without receiving voting instructions from those customers about how to vote them in an election of directors. This is a very important change to the process that many investors may have relied on when considering whether to return voting instructions. As a result, if you don’t complete the voting instructions, your shares will not be considered when directors are elected. The changes do not apply to customers' mutual fund or certain closed-end fund holdings. Your broker will continue, therefore, to retain discretion to vote uninstructed shares in director elections for these companies.

What you should do

Simply put, vote your shares! This is an important right that you have as an investor. Your involvement is essential to the corporate governance of the companies you own. Companies need to hear from you on important matters such as who should serve on the board of directors.

How to vote

You can vote in a number of ways. Before you vote, however you should review the proxy materials. You will typically receive your proxy materials directly, either receiving paper copies or, if you have agreed to electronic delivery, via email. A company may instead opt to send you a notice in the mail called a “Notice of Internet Availability of Proxy Materials.” The notice will provide details about how you can view the proxy materials online or request paper copies of the proxy materials. The proxy materials generally include a proxy statement, an annual report, and a proxy card or voting instruction form (depending on whether you hold the shares directly or through a broker). These materials will discuss, among other things, the issues on which you can vote.

In addition to the issues up for a vote, the proxy materials will also describe specifically how to vote your shares, including the following ways:

To vote in person, you must actually attend the annual shareholder meeting. The materials you receive will describe what you must do to attend, as well as the time, location, and date of the meeting.

To vote by mail, use the business reply envelope that came with the proxy materials you received in the mail. Indicate your vote by filling out a proxy card if you are a registered owner or, if you are a beneficial owner, your voting instruction form.

To vote by phone, use the number provided in the proxy materials. You will be prompted to vote using the control number provided in your materials.

To vote over the Internet, if the company has provided that option, you may use the website and control number provided in the materials.